School superintendents push back at comptroller’s claim of fiscal troubles

After years of sterling fiscal health reviews, both Riverhead and Shoreham-Wading River school districts have been designated as “susceptible to financial stress” by the state comptroller’s office, which said the two districts are in danger of increased financial instability if trends continue.

But superintendents for both districts said the comptroller’s office’s findings are inaccurate and don’t represent the districts’ overall fiscal health.

In Riverhead, the state comptroller’s office stated the district was running a deficit with its budget, a marked change from the past two years’ reports which showed no serious financial issues. In this year’s report, Riverhead was penalized for the alleged deficit and for taking out short term debt.

But Superintendent Nancy Carney insisted the designation was a quirk of accounting and that the district’s budget was balanced.

Ms. Carney said the district had moved funds from one fund to another — the Transportation and Athletic Fields Capital Reserve to the Capital Fund — based on a voter-approved proposition last year to spend $9.5 million to move the district’s bus barn.

Because those funds had to be accounted for, they appeared to have come out of the district’s general fund and caused the appearance of a deficit, Ms. Carney said.

“This occurred solely because we were required by accounting standards to transfer money among funds,” she said. “It is my deep concern that being designated as a district ‘susceptible to fiscal stress’ will cause concern to residents, but the community should rest assured because we have not actually overexpended our General Fund,” Ms. Carney told the News-Review.

A review of the district’s financial statements confirm the district did not have a deficit in its budget.

Brian Butry, a spokesperson for the state comptrollers office said the factors it uses to fill out the fiscal health reports “look at the numbers, not at the circumstances surrounding that.”

Ms. Carney said she has asked both the comptroller and Senator Ken LaValle’s office to change the way the comptroller completes its reports to make sure such false positives don’t show up on future fiscal health reports.

“The idea of the fiscal stress indicator is an excellent one and we applaud the comptroller’s office for providing New Yorkers with an evaluation tool to give a snapshot as to the fiscal health of their taxing municipalities,” Ms. Carney told the News-Review. “I am hopeful that the Comptroller will make adjustments to their measures in order to take these transfers into account when providing residents with a view on the financial outlook of a community.”

Like Riverhead, Shoreham-Wading River was also docked points by the comptroller’s office for budget deficits and short-term borrowing.

“You went from having a 7 million surplus at the end of one year to a $10 million deficit after another year,” Mr. Butry said, noting it was a “red flag.”

In a written statement posted to the district’s webpage, Shoreham-Wading River Superintendent Steven Cohen disputed that, said the designation of being “susceptible to financial stress” was due to money being transferred due to the school bond project, which was approved by voters in 2015.

Mr. Cohen also blamed a drop in state aid for falling revenues.

“The district’s use of reserves in the 2014-2015 budget contributed to a deficit in the financial statements, as the use of reserves is not considered revenue,” Mr. Cohen wrote. “Again, please be assured that this designation is not an accurate representation of the district’s financial status, and the Board of Education and administration are doing everything in their power to continue to provide Shoreham-Wading River students with opportunities for success while remaining fiscally responsible.”